Momentum Monday 11 December
Welcome to Momentum Monday.
Are we in a moment where the fabled Sanat Rally is in play? We certainly hope so. Though it's about 50% whether it is positive or negative so I am not going to count my chickens before they hatch (sorry… wrong analogy).
Interesting links
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This week’s content is as follows:
Broader market sentiment
Member corner
Stocks in the “Shine Zone” (including changes)
Buses pulling out of the station (volume + price movers)
52 week high screen (including changes)
A reminder that you don’t have to read all this contribution. Simply scroll to the area of interest.
Broader Market Sentiment
This a shortened version of the market sentiment this week as I recover from that latest setback.
We look at the direction of both the US and ASX markets to gain an understanding of the broader sentiment at the minute. It is important to stress here that I DO NOT use this to time my entry or exit out of stocks. I prefer to use the individual charts of stocks to do that. However I find it useful in helping us determine how aggressive/cautious traders should be in their trading. In short the more positive the broader market is the more risks you can take and vice versa.
US / S&P500
“Yea Haw” as we continue our run to our 4766 target.
S&P500 Weekly chart
We are already at 52 week highs for the market and it looks inevitable we will test previous all-time highs again.
For now short term support has risen to 4117. However with both RSI and MACD looking positive we have no immediate concerns at all.
The economic data received helped calm things down. It also helped that we recorded over 7th consecutive down week for oil. The first time that has been seen in 5 years.
My breathing analogy from last week remains in play. Each consecutive week we go up, increasing the potential for the next fall. Though for the moment we are in equities globally.
AUS S&P/ASX200
Positivity abounds as we bounce along the support range but had an incredibly strong break above it… to end up in the middle of it.
S&P/ASX200 Weekly chart
By that I mean we are still well and truly in the middle of the sideways move that started so long ago I actually forget when it started. I suppose I will just rely on the chart.
It's been a crazy end to the week with an $80B possible Woodside/Santos merger in a deal that would suit both parties if it got through. Then there was the smaller Soul Patts $3B play for Perpetual. Not that I want bankers to make even more money for doing nothing productive, it is a desperately needed deal for them. We also saw Sigma stay in trading halt following the Chemist Warehouse reverse listing. Then we saw the China led iron ore and Lithium boom help many of 52 week lows. Then we finished off with talk that Private Equity is looking to employ stability before the $2B listing of Guzmen y Gomez.
It was a busy Friday all contributing to a positive week.
All in all, it points to more exhaustion as M&A can often appear at the peak of a cycle. So I will be watching the upper resistance level like a hawk.
Member corner
In this section we will provide a detailed chart assessment, on a maximum of ten stocks weekly, on companies from those of you in the Gallery.
We welcome stock requests to be analysed from members. We will also be looking at the charts of some of the more actively researched stocks for the week. We will try to rotate through a selection so as to not make the charts stale, however we will likely not cover a stock within 2 months of when it was last discussed.
If you want to see what has been written about a stock recently, go to the discussion area.
We will not be making up suggestions. If there are no changes to the most viewed list and/or there are no suggestions from members, then no stocks will be covered.
To learn of the methods used to analyse companies in this section, refer to my Momentum Journey series that I articulate here in three parts.
They will help provide context on what I am writing about and the editorial angle of this report.
And again, if you have a stock you would like analysed from a momentum perspective, please write it into the comments section below or email us at @stockopedia.com.au">support@stockopedia.com.au
ASX: BHP - BHP Limited
StockRank 90
Momentum Rank 86
QM Rank 88
VM Rank 89
A$47.74
The big Australian BHP (ASX:BHP) was last talked about two months ago from a Momentum perspective, it continues to be a barometer for our benchmark.
In that last edition we said the price had to hold the $42.00 - $42.70 range which it did. We then said the price could even get to $46, which it did and passed. Good news is that since it was last discussed the price pulled back and ran again. This is a sweet spot for BHP and now would be a good entry. Stop would be at the $42.70 level identified earlier.
If you run an index style fund - ignore all I just said.
ASX: WDS - Woodside Energy
StockRank 83
Momentum Rank 40
QM Rank 67
VM Rank 76
A$29.18
Breaking my own rules on covering this within 2 months, though obviously a topic of discussion is Woodside Energy (ASX:WDS) hence it was one of the more watched stocks last week.
ASX:WDS 1 year Daily chart
No one has questioned the quality or value of this massive oil play. But as a price taker, not a price maker, it's share price is reflective of the oil price.
As we touched on earlier, oil prices are on a significant skid. As is the price of WDS . Even with the deal with Santos which I think would be a win - win for both over the long term, I can't fight city hall as a price taker.
I closed off the previous comment on WDS as being in a long term downtrend. The aggressive bounce off resistance is worrying, and now even more so. I spoke of that $39 resistance level and that remains in play. Otherwise this continues to be avoided, and to be frank, I feel there is better value at Santos, though it has had its troubles too. Long term structural support remains at $20.
As cautioned last time. The price chart of WDS reflects that of the oil price and USD. Those comments remain.
ASX: WHC - Whitehaven Coal
StockRank 99
Momentum Rank 85
QM Rank 96
VM Rank 98
A$7.20
Another stock recently viewed by members is Whitehaven Coal (ASX:WHC) and I can tell the collective question, “Is now the right time?”
ASX:WHC 1 year Daily chart
When last discussed two months ago, we said that price had to hold $6.05 and it has. You can see the support is stoic. It did break resistance and price has pulled back so is now a good entry point? Yes it is. That's why I took a position. My parachute stop is $7.00 for now and will keep it with then short term uptrend. I have to admit this is not my strongest setup, but I will watch it! And on the positive side I had to take it. Thems the rules.
ASX: RMD - ResMed
StockRank 56
Momentum Rank 49
QM Rank 76
VM Rank 30
A$24.70
It has been on our watchlists for while and subject of discussion, and with another two months passed we look Resmed (ASX:RMD)
ASX:RMD 1 year Daily chart
Unfortunately for me the price hasn't crossed below $20.00, though I thought the conditions were ripe before.
Anyway I said at the time that we could only buy above $24.10, now that we have had four positive weeks, the price has gotten above that level with a stop loss at $21.44 - it's as simple as that.
ASX: AEF - Australian Ethical Fund
StockRank 79
Momentum Rank 25
QM Rank 76
VM Rank 30
A$3.71
A member asked about Australian Ethical Investment (ASX:AEF) so we will cover them now. A reminder though, the price will reflect the underlying returns from its investments.
ASX: AEF 1 year Daily chart
And to be honest there is not much to add. It's at 52 week highs, it's broken resistance and a series of higher highs puts this in rarefied air.
It's coming out of a long term downtrend though. This may be the sign of life we've been waiting for. The latest results showed net inflows into the business, A stop from here would be $3,88 if you really believe, $4.39 if you don’t, and a lot of work to get back to all time highs.
It has not been a great time to be an eco-friendly investor.
Stocks in the Shine Zone
To learn about the Shine Zone and how to use it, you can read it here.
The rules for inclusion in this list are based on those I like to see in a stock before considering a trade in it:
QM Rank above 80
Price is above the 2.5x ATR
50d MA is above the 200d MA
Price is greater than the 200d MA
Market cap greater than $200M
This is a very important point: the “Shine Zone” are rules for possible buying. They are not for holding and/or selling. If a stock falls out of the shine zone, use support levels to set your stops, or instigate a parachute stop if necessary. With markets moving sideways, one expects frequent changes in these lists.
If you feel there is a stock that should be included but is missing please let us know. This is a manual process and occasionally one gets through the cracks
Data is at 09 December and is sorted by the stock code.
Changes from last week
Shine Zone list as at 09 December
“Bus pulling out of the station”
To learn more about this screen read the following article on the objective of the screen
Here is a shortcut in understanding the reasons why a stock is removed:
Volume drop = Bus might be moving, but no one is on it
Price 1 mth < 0% = Bus has been cancelled
Price 3mths >= 3% = Bus has pulled out of the station
Data is at 9 December and is sorted by the stock code.
Changes from last week
Due to technical issues there are no changes recorded this week. Simply compare the lists.
“Pulling out of the station” on 09 December
52 week high screen
In this section we identify stocks within 5% of their 52 week intraday high based on the idea, supported by academic studies, that stocks close to their 52 week highs tend to outperform. Weekly changes to the list will also be noted.
If you wish to recreate this screen in the screener select "Price vs 52 high" greater than -5% and Mkt Cap greater than $200M
A stock coming onto the list is NOT an automatic buy, just as a stock that leaves the list is NOT an automatic sell. As with the shine list, assess every chart on its merits. However movements on this list may alert you to interesting charts so be sure to look at Stockopedia and the chart first.
Data is at 09 December and is sorted by the stocks closest to their 52 week intraday high.
And remember, past performance is no guarantee of future performance.
Changes from last week
Stocks within 5% of their 52 week high as at December 09, 2023
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Information in this commentary is current as at date prepared unless otherwise stated. However, please bear in mind that investments can go up or down in value, and that past performance is not a reliable indicator of future performance. For more Important Information please refer to the Disclaimer section of this website.
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